CRB full decision released; small webcasters not mentioned

The Copyright Royalty Board (CRB) published its full determination, as expected following the very brief announcement of new webcast royalty rates on December 16. (See the full determination here.) To whatever extent small webcasters cast a hopeful wish that the complete royalty rate decision would offer some sign of a special provision for low-revenue Internet radio, that hope is dashed. In the CRB document there is one footnote mention of the phrase “small webcaster,” and a few minor references to the “Webcaster Settlement Act of 2009.”

As noted in RAIN News before, the CRB is charged only with setting a royalty rate for commercial webcasting as a whole, and not with creating special rates for groups of webcasters. So, though it was never realistic to expect a remedy for small webcasters in the CRB’s full determination, many webcasters we have spoken to did pin some hope on the release of this document, which serves as a final statementof the CRB rate ruling.

The Webcaster Settlement Act of 2009 (WSA) is the law which, among other things, protected small and mid-sized Internet radio stations by providing a percentage-of-revenue calculation for determining royalty obligation to record labels. That calculation arrived at a much less expensive royalty expense than the CRB rates for commercial webcasters set in 2005 and and 2010, each for five years. The WSA expired at midnight on December 31, and small webcasters have faced royalty expenses for 2016, and beyond, that are far beyond the affordable reach of many. An uncountable number of small and micro stations have pulled their plugs as a result. Somewhat larger streaming businesses are soldiering on, and some of those expressed hope that the full CRB determination would contain information that applied to them.

The Webcaster Settlement Act was forged from negotiations between SoundExchange (the government-sanctioned organization which collects and distributes webcast label royalties) and the music label groups. Strictly speaking the CRB’s job is to set a rate for commercial webcasting, without regard to special webcasting categories that might be arranging side deals with SoundExchange. Public radio and college radio are two such webcast groups that have negotiated special rates in the past, and did so again in the so-called Web IV process which resulted in this year’s new rate.

Participation in Web IV is expensive and highly bureaucratic, an easily understood reason why small webcasters, lacking an organized and funded advocacy group, did not participate in the arguments, legal submissions, and special requests of the CRB process.

Is it all over for small webcasters, then? Not necessarily. The Webcaster Settlement Act of 2009 was created in the middle of the Web II period, setting new rates for the remainder of Web II and all of Web III which ended on December 31. (NOTE: the WSA also documented special rates for other special webcasting categories, not only for small webcasters.) In theory, it is never impossible to negotiate a business arrangement with the music industry for streaming its records. We recently spoke with David Goldberg, and attorney representing the StreamLicensing platform which aggregates Internet radio stations, and he expressed a positive outlook.

“I do think labels, SoundExchange, everyone, sees the value in small webcasting,” he said. “I do feel there will be talks about this at some point. The landscape has changed since 2009, when the small webcaster settlement was passed. But there are reasons why everybody will want to at least talk about something.”

In the meantime, small webcasters still streaming must face an expensive licensing environment for the foreseeable future.

Brad Hill

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7 Comments

Brad: I think that it is unrealistic to expect the CRB to have addressed small webcaster issues in the decision as no small webcasters presented evidence at the trial for the CRB to consider. Small webcasters should not read anything in to the failure to mention small webcasters, and they should not be particularly disappointed by there being no mention of a small webcaster deal, as such a deal simply was not before the Judges for their consideration. If there is to be any small webcasters deal, it has to come not from the CRB but instead from a specially negotiated deal with SoundExchange, just as it has for the deals that have been in place for the last 15 years.
Also, I think that the reference to the Webcaster Settlement Act is a little misleading. While that was the act under which a small commercial webcaster deal arose in 2009, it was also the act under which the Pureplay Agreement was negotiated, as well as settlements with broadcasters, Sirius XM for their streaming, and at least three different groups of noncommercial webcasters. It was by no means adopted exclusively for small webcasters.

That’s why it was ‘catastrophic’ for Live365 not to be present during hearings. It was the worst time to have financial difficulties. Now US internet broadcast streams will suffer, and in the end, independent music artists and small webcasters, like myself, will lose out.

David, thank you. I have stressed to small webcasters on this site and in other venues that the CRB is not charged with creating side deals for special webcast categories. Still, many webcasters (including knowledgeable ones) were waiting for this document as a final word. I have added clarification to the article on this point. I understand that the WSA had a larger scope that just small webcasting, and have added a note about that.